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Test Number : 1Y0-610
Test Name : Citrix Core Technologies and Architecture
Vendor Name : Citrix
Q&A : 93 Dumps Questions

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Citrix Core Technologies and Architecture book

The Elliott management track list in tech offers | 1Y0-610 Dumps and Real exam Questions with VCE Practice Test

here is going to seem off subject for diginomica readers, but it is a must have for several causes, the most crucial of which is that, in line with their analysis, a relative few individuals be mindful the implications.

ERP vendor, SAP, has a tiger with the aid of the tail. Elliott administration, an activist shareholder, has decided that SAP’s stock is undervalued and desires its magic contact. The particulars of what Elliott administration desires to do are doubtful as discussions were stored deepest between SAP’s board and Elliott management and some of the movements that Elliott has looked for during the past are within the public area because it pertains to SAP however details are sketchy. in case you haven’t already, see this prior piece that offers further context.

Activist shareholders, because the identify implies, agitate for certain alterations. when you and i may own just a few hundred shares in a company, they have to be content to be passive investors. It’s the buyers with a considerable possession position in a company that have a chance of influencing the board and management. here is why an activist shareholder takes a material equity stake in a firm and might expand that place as a part of a crusade to get its concepts heard. from time to time, a proxy fight is initiated when an activist’s agenda meets resistance.

Elliott administration has validated that it might probably use distinct income creation strategies. at the extreme end, it has used litigation to get full price from sovereign bonds during which it invested. it could actually put organizations up on the market. it could actually block acquisitions. it might probably push out executives. it could possibly additionally take a more passive method to its investments. How will the SAP investment go? There can be some clues from previous Elliott management offers.

Deal experiences

SAP isn’t the most effective enterprise getting the Elliott administration medication. In 2017, Fortune magazine mentioned:

during the past 5 years, Elliott has launched activist campaigns at greater than 50 agencies—19 this yr alone (2017)—in as a minimum a dozen international locations.

Elliot administration is neatly standard to boards of directors globally. In contemporary years they have got taken positions or requested alterations at a lot of establishments, among the many most excellent tech contingent, are BMC, Compuware, Novell, EMC, Cognizant, Citrix and now SAP.

In reviewing prior offers, some common themes emerge. Elliott management frequently:

  • starts off its crusade with an funding of 1% or greater of the goal firm’s stock.
  • Sends a letter or presentation to the board of the goal enterprise which it will probably or might also no longer make public.
  • Angles to get its chosen representatives on the board.
  • Tries to get other shareholders (e.g., institutional investors) to back its trade agenda.
  • Outlines several initiatives which are designed to boost shareholder price (e.g., share repurchases, dividends, spinoffs, sale of the company, and so forth.).
  • Makes concepts regarding operational improvements.
  • Takes its earnings and moves on.
  • but Elliott can additionally:

  • Get a CEO or Chairman ousted.
  • Block an organization sale.
  • Take the company private by the use of its personal (or one other) deepest fairness transaction.
  • via it all, Elliott will try to get a big return on its investment. Some prior offers have netted the enterprise 60-one hundred% ROI in a comparatively short time body. The main factor to understand is that Elliott management does deep analysis before taking a position, regularly over years and with considerable due diligence. it's the prior work that allows for it to goal a company with a high diploma of precision and, as a result, continually get its manner.

    A overview of Three Prior deals

    There are three prior offers with which readers should acquaint themselves to take into account more desirable the sorts of conversations Elliott has with the leadership of its goal agencies. we've chosen three deals, Citrix, Cognizant and BMC. In every case, Jesse Cohn, head of activism at Elliott became the lead, as is the case with SAP. each and every offers a a bit distinctive standpoint on how Elliott administration pursues its campaigns. 

    Citrix

    The Citrix action begun with this open letter published on BusinessWire: 

    We agree with that Citrix can obtain a stock expense of $90 – $100+ per share with the aid of the end of 2016. This outcomes – which represents a rise in stockholder value of about 50% – is potential as a result of Citrix has main know-how franchises in beautiful markets but has struggled operationally for years. consequently, these days Citrix’s operations and product portfolio characterize an opportunity for growth of uniquely gigantic magnitude.

    In an early commentary, Brian Madden penned a chunk titled. everyone needs to calm down about this Elliott factor. Citrix had it coming through which he observed: 

    Put Elliott apart and ask your self “What does Citrix try this is definitely miraculous?” The answer most individuals will say is XenDesktop and XenApp. Others will say NetScaler, nonetheless it’s more often than not as a result of they’re the use of it with XenApp and XenDesktop. You’re no longer likely to hear GoTo, ShareFile, and XenMobile, and you’re in fact no longer going to listen to Podio, ByteMobile, or Cloud.com (or something that became into inside Citrix).

    For its half, Citrix became already taking into account at least some of the moves that at last unfolded. as an instance, the eventual sale of GoTo become already h the playing cards. Madden goes on to talk about in extensive phrases how Elliott views its goals: 

    In each and every case, Elliott was troubled by a corporation’s loss of center of attention on their core potential. for example, Elliott made an offer to buy Novell, declaring that the enterprise "has tried to diversify faraway from its legacy division with a series of acquisitions and adjustments in strategic focal point which have mostly been unsuccessful.” What of that isn’t a hundred% true? Elliott offered $5.seventy five per share for a complete of $1 billion, which Novell rejected. To be clear, Elliott didn’t want to get into the software game and run Novell. They wanted to own Novell for simply lengthy sufficient to pare it down and sell it at a earnings. Novell rejected the present, however later offered to Attachmate for $2.2 billion while Elliott became nevertheless a shareholder. Mission completed.

    As a part of the contract, Jesse Cohn secured a seat on the board; belongings have been bought and, over time, economies were made. bound sufficient, the moves Elliott wanted to peer bore fruit. regardless of the ax being taken to the business, Citrix share fee nowadays out performs that of SAP. Cohn still sits on the board which implies Elliott thinks there may be nevertheless more to return. 

    along the style, there have been some hiccups - now not least the are attempting out of two CEOs that did not deliver. 

    The Citrix story is one that demonstrates that:

  • A non-combative method to an activist investor needn't be painful. 
  • Elliott's prefer of management is never at all times suitable within the circumstances. 
  • Activist traders are every now and then obligatory to get an in any other case tremendous enterprise to center of attention on what makes it amazing, and, through doing so, benefit everybody. 
  • in spite of past success, fresh eyes seen as a chance for sincere reflection may also be the appropriate Rx. 
  • Cognizant

    Forbes summarized the starting of the Cognizant motion consequently:

    On Monday, Cohn unveiled his largest new stock guess of the yr, disclosing a $1.four billion stake in IT consultancy Cognizant expertise solutions neighborhood and a plan for the $36 billion market capitalization company to Improve its performance.

    Elliott believes Cognizant shares are being held returned by means of the business's focus on growing to be revenues over earnings margins and a reluctance to raise stock buybacks, or present a dividend, because it's grown into a tremendous participant in the IT capabilities business with over $13 billion in annual revenues. prior to Monday, Cognizant shares were off over 10% yr-to-date, underperforming the S&P 500 Index. Teaneck, NJ-based Cognizant's shares rose pretty much 7% on Elliott's activist position and its plan to Improve efficiency.

    What did Elliott administration need? once more, Forbes reviews:

    The hedge fund's techniques boil right down to having Cognizant initiate a dividend with the intention to present shareholders a yield of 1.5% in line with Friday closing fees, and a dedication to come back seventy five% of its annual U.S. free money circulate through share repurchases. as a result of Cognizant's balance sheet incorporates $4 billion of cash and little debt, Elliott is additionally asking Cognizant to buy back $2.5 billion in inventory by mid-2017, funded with $1 billion in money available and $1.5 billion in new debt financing.

    Cognizant determined no longer to battle Elliott and complied with a lot of Elliott’s calls for. The financial times of India mentioned:

    In February 2017, the enterprise complied to Elliott’s calls for, committing $3.4 billion in share repurchases and dividends over two years; embracing automation, rationalising staff and transferring center of attention against higher margin digital business. It also introduced in new board individuals precise with the aid of Elliott management.

    From 2019, it is going to additionally return seventy five% of its US free cashflow to shareholders either via share buyback or dividends.

    In a liveMint story, Frank d'Souza, then CEO Cognizant turned into quoted as saying: 

    We engaged with Elliott, they talked to them, they also used that time to re-have interaction with many shareholders, no longer just Elliott, and they took the input from all of these guys, and that’s why from the time Elliott published the letter, which was late November 2016, to the time they announced the accelerated shift to digital, which became February 2017, in a comparatively brief period of time, they have been in a position to get it performed as a result of they had been doing the foundational work for a good deal of the 2d half of 2016.

    Elliott management made approximately a 50% benefit on the shares it used in this deal.

    in its place of classifying the Cognizant experience with Elliott as a risk, D’Souza talked about:

    From a “learnings from Elliott” standpoint, they had a beneficial dialog with a shareholder that had concepts about how they may still run the business and they arrived at a conclusion element that I believe was good for all of their shareholders and have been in the most efficient interests of the enterprise in the long run. So, that’s no longer my definition of a risk.

    This story is instructive as it indicates:

  • now not all dealings with Elliott administration should be prolonged or complex.
  • That Elliot management knows when an organization should shift from boom-at-all-prices to a mature firm that needs to start returning capital to shareholders.
  • That Elliott has completed other offers of roughly the identical investment degree as the SAP deal.
  • BMC

    every reader may still familiarize themselves with the circulation Elliott management tried with techniques application company BMC utility. In 2012, Elliott administration tried to shake issues up at Houston-primarily based BMC application.

    inside just a few months:

  • BMC had expanded the number of administrators on its Board of directors.
  • brought two skills board contributors to the slate of those to be regarded for board positions by way of Elliott management
  • within a year or so, BMC changed into taken private by means of a private fairness deal. Bain Capital and Golden Gate companions led that deal. in view that then, the business’s possession has shifted some greater as Bain Capital, and Golden Gate companions bought their position to one other private fairness company KKR in 2018.

    The BMC Playbook

    if you are in SAP consumer, worker or associate you deserve to click on this hyperlink and read Elliott administration’s board presentation to BMC software in 2012.  As you do, you can also find yourself substituting the letters “BMC” with “SAP”.

    beginning round slide eleven, Elliott lays out its case for why material exchange is required at BMC software. First, they declare that the inventory has been underperforming. second, they argue that the business has destroyed shareholder cost. Third, they argue that the enterprise has two groups.

    after they get to slip 25, Elliott summarizes its chief concerns:

  • administration has did not execute
  • negative stewardship of stockholder’s capital (contains a dialogue on ineffective M&A)
  • Failure to absolutely optimize operations (contains discussion on a scarcity of meaningful organic increase)
  • aggressive landscape is altering
  • strong want for brand spanking new directors with valuable experience and new concepts
  • when they get to slip forty five, they see the selected objects that Elliott desired BMC to put into effect (i.e., “free up EMC’s strategic price”). These blanketed:

  • installation four new board members that Elliott management believes would move the business within the right course
  • explore the sale of the business to one other expertise company
  • discover the sale of the enterprise to inner most fairness enterprises
  • take on greater debt and return money/capital to shareholders by means of dividends or inventory repurchases
  • determine and put in force operational advancements on the way to generate about 10% enhance in operating margin. growth areas may include:
  • offshoring R&D
  • discount in administration ranks
  • sooner rationalization of bought groups
  • advancements in staff productiveness
  • refocus the enterprise on predominant increase opportunities in the market
  • Does Elliott depart when the inventory fee firstly pops up?

    After reviewing many offers, the reply to here is a spectacular “NO”.

    If that sounds illogical, then read on. The mere indisputable fact that Elliott management has taken an equity position in a corporation sends a sign to other investors that trade is on the style and that these adjustments might set off the stock to rally in time. subsequently, the stock rate raises earlier than (and in anticipation of) future alterations are applied.

    This phenomenon is so general that Elliott even uses this to its abilities when angling for greater alternate within an organization. When Elliott administration made a presentation to the Arconic board, the incontrovertible fact that Arconic’s book value jumped $3 billion and its share cost multiplied 35% upon the information of the funding show that Wall highway agrees with Elliott that adjustments are vital.

    The Elliott effect

    a similar issue has took place with SAP’s shares. CNBC said that SAP shares:

    ...rose with the aid of greater than 12 %, their biggest day by day profit because November 2008. SAP’s shares have underperformed rivals Oracle, Salesforce and Microsoft in the past three hundred and sixty five days. It trades at a forward fee/earnings ratio of 21, compared to 58 at Salesforce, an all-cloud outfit, and 25 at Microsoft.

    Readers should bear in mind what this capability:

  • Wall highway thinks SAP might do a lot more to enrich shareholder returns on their investments
  • Wall road seconds Elliott’s opinion/actions
  • Elliott isn't going to stroll away with just this brief-time period inventory fee bump.
  • ultimate recommendations

    while they assume a comparatively easy transition, about which they have more to say in a follow-up story, it's value noting that Elliott doesn't always get the effect it concept. for instance, the Arconic transaction has been fraught with concern. while that deal become no longer led via Cohn's group, it displays how messy things can develop into. 

    The Alcoa/Arconic deal remains ongoing after a few years, and perhaps essentially the most troubled. Bloomberg BusinessWeek sets the tone of this protracted and long gone awry deal in a superb article past this year. They write:

    Elliott administration Corp. spent years pushing for adjustments at Arconic Inc. and its pre-breakup predecessor Alcoa Inc., arguing a more advantageous management group could steer the business towards bigger profit margins. It become a success in casting off many leaders, however less so in achieving a much better inventory expense.

    unlike so most of the other Elliott management offers, this one, up to now, has not been a full success. Bloomberg states: 

    Elliott promised a share expense pop on the back of margin gains that haven't been so effortless to achieve.

    A evaluation of prior dealings by using Elliott management is instructive.  It indicates a firm it's:

  • able to doing lots of very large offers simultaneously
  • able to doing many things (e.g., litigate, proxy fights, forcing/halting sales, and so on.)
  • now not scared of taking over any enterprise, board or govt
  • willing to accomplice with different traders
  • Aggressive, disruptive or participative reckoning on how the target’s board reacts to them
  • contrary to what some have speculated, a rise in SAP’s share expense does not imply Elliott management will circulate on from SAP anytime quickly. further movements via SAP will be crucial for Elliott management and other shareholders to understand the totality of the gains they are expecting.

    SAP has already responded to Elliott. which you can see that from what was observed on the Q1 FY2019 income call which marked a substantial shift from its position ultimately years’ Capital Markets Day. predict to hear extra at SAP’s upcoming Q2 FY2019 revenue name.


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